Posts tagged ‘ArcelorMittal (MT)’

Downplayed if not dismissed by the previous Parti Quebecois government, Quebec’s Plan Nord is back “in an enhanced version,” the province’s new Liberal government says. Its 2014-2015 budget includes a number of funded initiatives to encourage infrastructure and resource development north of the 49th parallel, making natural resources “the centrepiece of Quebec’s economic development.”

Some spending highlights released June 4 include major road work, a feasibility study on a Labrador Trough rail line, government investment in mining and oil and gas companies, and training for northern residents.

A Northern Plan Fund commits $63 million during 2014-2015 for projects like “major work on road infrastructure in the Plan Nord territory, including the extension of Highway 138 and the repair of Highway 389 in the Côte-Nord region and the James Bay Highway.”

The government also plans to study the feasibility of a new rail line to the Labrador Trough. Media accounts put the price tag at a maximum of $20 million.

Finance Minister Carlos Leitao confirmed his government’s “intention to acquire equity interests in companies in the mining and oil and gas sectors, so that Quebec society can obtain, as a shareholder, a direct share in the profits.”

Plan Nord will encourage smaller, local hydroelectric projects while spending $1.1 billion on a fourth transmission line from the north to serve the northern Montreal “agglomeration.”

Education and training for northern residents will get a $100-million boost, the Liberals stated.

But the previous government’s controversial tax regimen stays put—for the sake of stability, Leitao claimed. Acknowledging that the taxes contributed to declining investment, he stated, “We will restore industry and investor confidence by ensuring the application rules are favourable, stable and foreseeable. We are maintaining the existing mining tax regime in order to preserve that stability.”

The government will support small mining companies and Quebec ownership, Leitao added.

To co-ordinate development in consultation with stakeholders, the government will create a new agency, la Société du Plan Nord.

Champion Iron TSX:CIA welcomed the railway feasibility study, even calling it “a defining point in the history of the mining industry in Quebec.” The company’s June 6 news release stated the global steel industry recognizes the Labrador Trough’s potential “to supply high-quality iron ore product, with a range of listed and private iron ore groups active in the region including Champion Iron.”

The company credits the Trough with “one of the world’s largest iron ore accumulations, with annual production of some 50 million tonnes.”

In February 2013 CN TSX:CNR suspended its feasibility study, undertaken in partnership with pension/insurance fund manager la Caisse de dépôt et placement du Québec and a group of mining companies.

Two railways now connect the region with the St. Lawrence River deep-sea port of Sept-Iles. The 420-kilometre Cartier Railway, a subsidiary of ArcelorMittal NYE:MT, serves the company’s Mont-Wright operation. The 418-kilometre Quebec North Shore and Labrador Railway links operations of the Iron Ore Company of Canada (held 59% by Rio Tinto NYE:RIO) in Labrador City, on the Trough’s Newfoundland side. The QNS&L is obligated to carry other cargo, making it the region’s only rail accessible to third parties.

The world’s largest steelmaker, ArcelorMittal NYE:MT, has reported a net loss of $2.5 billion for 2013—a $1.2-billion improvement on the 2012 financial year.

The loss is largely the result of impairment charges and restructuring costs.

Operating profit—earnings before interest, tax, depreciation and amortization—of $6.9 billion were slightly lower than the year before and net debt decreased by more than 25%. The company ended the year with its lowest net debt level since its creation in 2006.

Lower steel prices dragged sales down by 5.7% to $79.4 billion.

Outlook

ArcelorMittal says it’s “cautiously optimistic” for 2014 and is forecasting EBITDA earnings of approximately $8 billion.

But the steelmaker cautions that this performance hinges on several key conditions. Most importantly, steel shipments need to increase by 3% and marketable iron ore shipments must rise by 15%. Canadian mines, having reached full ramp-up in December, should help boost iron ore volumes.

Based on the current economic outlook, especially in regard to European manufacturing activity, ArcelorMittal expects global steel consumption to grow by as much as 4% this year.

The outlook is also based on an average iron ore price in line with the market consensus (approximately $120 per tonne for 62% Fe CFR China) and a moderate improvement in steel margins.

“While there remain risks to the global demand picture, ArcelorMittal expects the fundamentals, particularly in our key markets in the developed world, to be more supportive in 2014 than in 2013,” the company wrote in its 2013 report.

The company is targeting net debt of $15 billion in the medium term and will not increase dividend payments until that point. In a separate announcement, the steelmaker announced a yearly gross dividend of 20 cents per share, to be paid out in July 2014.

The Luxembourg-based company’s share price spiked early February 7 on the New York exchange but by mid-afternoon was trading down to the previous day’s range of around $17 per share.

A mining and exploration retrospect for March 29 to April 5, 2013

By Wednesday 66 bodies had been recovered from the Good Friday landslide that buried a tent camp for miners in Tibet. Seventeen more people were missing and presumed dead. Weather was to blame, according to a Tibetan government official cited by the New York Times. But the Economist quoted a Chinese government official who called it a “natural geological disaster.”

China has reportedly barred foreign media from the site, ordered its own media to limit their coverage to that of the state-run Xinhua news agency and censored social media. Apart from the carnage, the landslide poses a disaster for Chinese-Tibetan relations, as well as the image of Chinese mining and resource imperialism. The camp housed workers for the Gyama copper-polymetallic mine (a.k.a. the Jiama mine), which belongs to a wholly-owned subsidiary of China Gold International Resources TSX:CGG. The Vancouver-headquartered company’s “controlling shareholder is the China National Gold Group Corp, a state-owned enterprise and China’s largest gold producer,” reported the National Post.

Only two of the 83 dead are Tibetans. The rest came from distant parts of China. “Managers at big state-owned firms are usually Han Chinese, who in turn tend to regard their own ethnic kin as easier to control and communicate with than Tibetans,” stated the Economist. The magazine quoted a 2012 China Daily story saying that 35% of the mine’s workers were non-Han, which the state-run paper called “the highest percentage among mining companies in China.”

As Bloomberg reported, “China’s history of mining incidents includes the world’s worst safety record at its coal mines, which saw 1,973 people killed in accidents in 2011 and 2,433 the year before that, according to the State Administration of Work Safety.”

Several hours after the Tibetan landslide, a coal mine blast in northeastern China left at least 28 dead and 13 injured. A second explosion on Monday killed at least seven rescuers, said CCTV.com. “The mine is a state-owned colliery,” Xinhua added.

On March 14 NBC reported that a coal mine accident in southern China killed at least 21 people.

A Tuesday news release from China Gold International Resources stated its Tibetan mine, about 10 kilometres from “the geological disaster site,” was not damaged. Production continues.

Will private equity lead investors back to mining?

“The only people who want to lend to this industry right now—and a lot of executives call them the mafia of the mining industry—are the royalty trusts, and they really extract a lot.” In an Equedia interview posted on Wednesday, Kenneth Hoffman of Bloomberg Industries Global Metals and Mining Research said private equity could be the miners’ salvation. And the miners are clamouring for it.

Sabina Faces a Huge Challenge in Nunavut

By Ted Niles

The Canadian Arctic contains the largest reserve of unexploited natural resources in the world. But they have remained unexploited for good reasons: savage weather and nominal infrastructure. Even as talk of climbing temperatures and Prime Minister Stephen Harper’s commitment to the region excite interest, the cost of development remains a dauntingly high barrier to entry for such as Sabina Gold & Silver.

In response to this challenge, Sabina announced June 2 that it had sold its Nunavut Hackett River Project and some Wishbone Greenbelt Belt claims to Swiss mining giant Xstrata for $50 million and a silver production royalty equal to 22.5% of the first 190 million ounces of payable silver and 12.5% thereafter. President/CEO Tony Walsh explained that the deal “transforms Sabina into a purely precious metals company… Our goal is to become a mid-tier gold company producing between 300K to 400K ounces of gold per year from Back River, a project scope we believe we can expedite.”

The Back River gold project, located about 60 kilometres from Hackett River (and 70 kilometres south of the Arctic Circle), consists of seven claim blocks, the most important of which are the Goose Lake and George properties. Since acquiring the project from Dundee Precious Metals in 2009, drilling has focussed largely on Goose, and the discovery of the Llama and Umwelt deposits there have considerably increased the project’s resources. In March 2011 Sabina announced a new resource estimate for Back River of 2.66 million ounces gold indicated—more than doubling the existing indicated resource—and 1.56 million ounces gold inferred.

The objective of Sabina’s 2011 drill campaign is to add at least another 700,000 ounces of gold to the resource. VP Exploration Manojlovic tells Resource Clips, “We’re still drilling up there right now, and we will be until the end of September. We have nine drills currently turning. We have five drills working on the Umwelt itself—we’re expanding that deposit. Last year we drilled about 550 metres at the top end of that deposit, brought it to a resource, and this year we’re drilling to get the additional mineralization to the south. Once we’re done at the end of September, we’ll be working on doing the resource from that 550 metres down to however deep we take it by the end of September. We would hope to get [the updated resource] out by 4Q.”

We have very high confidence that we will continue to increase resources and bring the project to the mining stage —Peter Manojlovic

Manojlovic comments, “We’re quite excited about the results that we’ve released. Certainly the highlight was the hole that returned 13 g/t over 24 metres. The deposit now extends from, basically, near surface at the north down to about 650 metres at the south end, which is where that hole is. It demonstrates the incredible continuity of the deposit over 1.4 kilometres. The thickness is very consistent as well.”

He continues, “We hope to complete our drilling and get those resources and begin a preliminary economic assessment of the project this fall. We see that as having a high likelihood of being positive. We would progress as rapidly as we can once we reach that stage.”

Sabina believes that Ontario’s Timmins and Kirkland Lake mining districts presented similar challenges to what the Far North faces today, and as awareness of Nunavut increases infrastructure will follow. Prime Minister Harper made a step in this direction August 24 with the investment of $230,000 in the establishment of an Iqaluit office for the Northwest Territories and Nunavut Chamber of Mines. More important, perhaps, is the investment in Nunavut by other miners. Apart from numerous juniors exploring there, majors include Agnico-Eagle—whose Meadowbank gold mine began production June 2011—as well as ArcelorMittal, Areva, Newmont, BHP Billiton and Xstrata.

However, according to an August 31 Reuters story, Agnico-Eagle has invested $1.5 billion in Meadowbank, while “Newmont has spent $2 billion so far on its Hope Bay gold deposits in western Nunavut, and there is no guarantee a mine will ever be built.”

Nevertheless, Manojlovic concludes, “We’re extremely excited about Back River. Sabina has been working on the project for about two years, and in those two years we’ve made a number of new discoveries, the most significant of which are the Umwelt deposit and the Llama deposit. We’ve increased resources there quite substantially, so we have very high confidence that we will continue to increase resources and bring the project to the mining stage.”

Sabina Gold & Silver currently has 160.3 million shares trading at $4.88 for a $782.2 million market cap. Sabina also has three early-stage exploration projects in Ontario’s Red Lake mining district.